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1 Earnings Presentation_Bank Only 1Q13 www.vakifbank.com.tr INVESTOR RELATIONS Earnings Presentation BRSA Bank-Only YE 2013 February 13, 2014

INVESTOR RELATIONS Earnings Presentation Bank Only 1Q13 … · 2014. 12. 11. · 2 INVESTOR RELATIONS Earnings Presentation_Bank Only YE13 4Q 2013 VakifBank Highlights Ouarterly bank

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  • 1

    Earnings Presentation_Bank Only 1Q13

    www.vakifbank.com.tr

    INVESTOR RELATIONS Earnings Presentation

    BRSA Bank-Only YE 2013

    February 13, 2014

  • 2

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    4Q 2013 VakifBank Highlights

    Ouarterly bank only net income is 424.3 mio TL, up by 65.5% QoQ. Annual bank only net income is 1,585.5 mio TL; up by 8.6% YoY.

    Quarterly and annual ROAE came at 13.7% and 12.9% respectively.

    NIM, backed mainly by CPI linkers, widened 7 bps QoQ and reached to 4.20% despite back loaded loan growth; TL security yields increased more than 250 bps QoQ and reached to 9.55%.

    Annual NIM materialized at 4.80% in line with the guidance.

    Quarterly loan growth was 5.6%, which brought annual loan growth to 27.5%.

    Quarterly and annual deposit growth are 5.7% and 21.3% respectively. Deposit growth is mainly driven by demand deposit and retail deposit which is up by 25.4% and 25.3% YoY respectively.

    Loan/Deposit ratio is flat at 106%.

    Asset quality remained intact and NPL ratio improved 2 bps to 3.92% without asset sale and write-off.

    Limited quarterly Group 2 loan growth of 4.3% and 14.6% contraction YoY; the share of Group 2 loans in total loans went down 1.9 pps YoY and 4 bps QoQ.

    Remarkable annual fee growth of 53.3%, despite collected but not reported loan related fee amount which further increased to 185 mio TL.

    The eyecatching development of 2013 was branch extension. 115 new branch opened during 2013 and number of branches reached to 859.

    Despite hefty distribution increase, opex growth is down by 5.7% QoQ and up by 16.3% YoY, which brought cumulative Cost/Income ratio 10 bps down to 40.6%.

  • 3

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    ROAE (%) Net Income (Mio TL)

    YE 2013 Earnings and Ratios

    8.6%

    1,460.1

    ROAA (%)

  • 4

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Breakdown of Assets (%)

    Well managed asset mix

    Total Assets (TL bio)

    Interest Earning Assets (TL bio)

    29.6%

    26.0%

    6.7%

    5.8%

    The share of loans in total

    assets

    63.8% vs Sector

    Average of

    60.5%

    Other *

    Interbank

    Securities

    Loans

    84.4% of total 82.1% (106 bps)

    (133 bps)

    82.9%

    *Other includes Cash and Reserve Central Bank, Subsidiaries and Investment, Property and Equipment and Other.

  • 5

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    FC Loans (USD bio)

    Comfortable LtD ratio thanks to strong deposit growth

    Total Loans (TL bio)

    27.5%

    67.9

    81.9 5.6%

    7.5%

    Loan/Deposit (%)

    4.6%

    5.9%

    86.5

    100.9 106.1 106.2

    (1.3%)

    26.9%

    29.3%

  • 6

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Yields (%) Cost of Deposits (%)

    Net Interest Margin (NIM %)

    TL Loans TL Securities

    FC Loans

    TL Deposits FC Deposits

    NIM, Spreads and Costs

    32 bps (14 bps) 253 bps (4 bps)

    7 bps

    (30 bps)

    (9 bps) FC Securities*

    * MIS data.

    44 bps

  • 7

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Breakdown of Loans (TL bio)

    Well diversified loan breakdown

    SME**

    Com.&Corp.

    Mortgage

    SME

    Retail

    Com.&Corp.

    60 bps

    (40 bps)

    (20 bps)

    Portfolio Shift (%)

    Other*

    GPC

    *Other includes credit cards, overdraft and auto loans. **SME book is reclassfied in line with new formal SME definition of government, annual turnover up to 40 Mio TL companies are classified under SME.

    67.9 77.1

    27.5%

    5.6%

    81.9 86.5

  • 8

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Strong presence in key retail segments thanks to

    2.3 million pay-roll accounts

    General Purpose Consumer (TL bio)

    The negative impact of overdraft cap compensated by volume growth

    Total Retail (TL bio)

    Residential Mortgages1 (TL bio)

    1 Includes TOKI projects.

    25.6%

    21.7% 29.2%

    Retail Overdraft (TL mio)

    35.4%

    16.9%

    3.1% 3.8%

    3.6%

  • 9

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Credit Card Loans growth YoY;

    36.5% Sector growth YoY;

    22.5%

    Credit Card Loans (TL mio)

    Credit card loan growth momentum is loosing steam; priority is moderate but profitable growth

    *Calculations based on monthly BRSA report.

    Average Quarterly Issuing Volume (TL mio)

    36.5%

    Market share* (%)

    1.6%

  • 10

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Commercial&Corporate (TL bio)

    SME loan growth is in line with budget

    30.4

    Total Com.& Corporate Loans**(TL bio) SME*(TL bio)

    *According to VakifBank MIS data. Micro & Small SME: annual turnover < 8 Mio TL, Mid-Cap SME: annual turnover between 8 to 40 Mio TL **Includes corporate loans, SME loans, overdraft & credit card loans.

    14.3%

    28.8%

    Project Finance

    Loans grew

    16.4% YoY in

    USD terms

    7.0%

    8.2%

    11.2%

    Project Finance Loans (USD bio)

    16.4%

  • 11

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Other

    Bonds

    Breakdown of Liabilities (%)

    Liability diversification towards longer duration DCM activity continued

    15.0%

    Wholesale Borrowing

    Funds Borrowed+Bonds Issued +Sub-debt / Liabilities

    Other

    Repo*

    Funds Bor.

    SHE

    Deposits

    Liabilities Shift (TL bio)

    Funds Bor.

    SHE

    Deposits

    135.5 104.6

    *Includes CBRT and market TL & other FC repo transactions. **3.9 bio TL CBRT Repo Transactions as of YE13.

    Deposits Heavy Funding Structure

    Total Deposits / Liabilities

    60.2%

    21.3%

    Bonds Sub-Debt

    Sub-Debt

    Repo**

  • 12

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Total Deposits (TL bio)

    Total Retail Deposits (TL bio)

    21.3

    25.3%

    Solid deposit franchise with faster growth on demand and retail deposits

    25.4%

    Demand Deposits (TL bio)

    2.9% 5.8%

    67.2

    6.2%

    5.5%

    77.2 71.8 81.5

    FC Deposits (USD bio)

    0.2%

    4.0%

    5.7%

    Demand Deposit growth YoY;

    25.4% Share of Demand Deposits in total;

    16.8% vs

    16.2% in 2012

  • 13

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    22.128

    Timely reshaped securities portfolio in favour of CPI linkers

    Total Securities (TL mio) Portfolio Structure

    19.8% CPI Linkers’ share in TL Securities

    increased from

    14.2% in YE12 to

    28.7% in YE13

    18.467 20.429

    Total 18.3 bio TL

    3.9 bio TL equivalent

    21.691

    2.0%

    76.5%

    0.5%

  • 14

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Overall NPL Ratio* (%)

    NPL Ratios

    *Accumulated NPL, no write off & no asset sale for Vakifbank. **NPL Ratio, if legacy NPL before 2008 excluded. ***MIS data according to official SME definition.

    SME NPL (%)***

    Sector

    Sector

    Total Retail NPL (%)

    Credit Cards NPL (%)

    Sector

    Sector

    W/O Legacy NPL**

    Mortgages NPL (%)

    Sector

    General Purpose Consumer Loans NPL (%)

    Sector

    Sector; W/O NPL sales & write-offs

  • 15

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    NPL (mio TL)*

    Asset quality

    * Accumulated NPL, no write off & no asset sale. ** According to monthly BRSA data.

    Group II Loans (mio TL) Specific Cost of Risk (%)

    Breakdown of New NPL Inflow (%)

    Sector**

    Com. Inst.

    Com.&Corp.

    Other

    Credit Cards

    Mortgage

    GPC

    2.5 ppt

    Coverage Ratio (%)

    3,358

    Share in total loans

    (14.6%)

  • 16

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Capital Adequacy Ratio (%)

    BRSA Recom.

    12%

    Min. Ratio 8%

    Solvency ratios

    11.3% 11.0% 12.3% 12.3% 10.6%

    BASEL III 14.11*

    11.4%**

    Core Tier I

    BASEL III Core Tier I

    As of YE2013, under Basel III;

    * 41 bps increase on CAR ** 75 bps increase on Core Tier I Ratio

  • 17

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Net Interest Income (TL mio)

    High quality earnings breakdown

    Breakdown of Total Revenues (%)

    Net F&C

    Trading

    Other

    NII

    Net F&C

    Trading

    Other

    NII

    YE13

    YE12

    Core Banking Revenues* (TL mio)

    20.8%

    *NII + NFC

    Dividend

    Dividend

    17.3% 4,085 4,790

    7.7%

  • 18

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Net Fee and Commission Income (TL mio)

    Net Fee and Commission Income

    Breakdown of Net Fee & Com. Income (%)

    Fee/OPEX(%)

    Credit Cards

    Inquiry &Expertise

    Insurance

    Other

    Cash Loans

    Non-Cash Loans

    Credit Cards

    Inquiry &Expertise

    Cash Loans

    Non-Cash Loans

    Insurance

    447.7

    686.5 53.3%

    8.5%

    168.2

    6.3 ppt

  • 19

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Advertisement Exp.

    2,568*

    Breakdown of Operating Expenses (%) Operating Expenses (TL mio)

    Comparable Opex growth* is lower than guidance despite all time record branch extension

    Cost/Income (%)

    * Excluding one-off 61.6 mio TL Competitionary Board fine.

    (100 bps)

    Administrative Exp.

    Rental

    Advertisement Exp.

    Other

    Personnel Exp.

    YE13

    41.6

    42.0

    6.9

    3.2 6.3

    YE12

    Administrative Exp.

    Rental

    Other

    Personnel Exp.

    39.7*

    13.6%

  • 20

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    Distribution Channels & Customer Base (#)

    YE2013

    Branches 859

    ATMs 2,919

    Personnel 14,943

    POS Terminals 134,124

    Outstanding Credit Cards 3.0 mn

    Total Customers 15.6 mn

    Total Payroll Customers 2.3 mn

    Internet Banking Customers 2.4 mn

    Active Mutual Fund Customers 1.5 mn

    Efficiency (‘000 TRY) YE2013

    Assets per Employee 9,068

    Assets per Branch 157,737

    Loans per Employee 5,788

    Loans per Branch 100,694

    Deposits per Employee 5,456

    Deposits per Branch 94,916

    VakifBank with numbers

    115 new branch openings in 2013

  • 21

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    (TL-mio, %) YE2012 3Q2013 YE2013 YoY

    Growth QoQ

    Growth

    Cash & Balances with Central Bank 12,328 17,104 18,968 53.9% 10.9%

    Interbank 1,955 1,582 2,639 35.0% 66.9%

    Securities 18,467 21,691 22,128 19.8% 2.0%

    Loans 67,868 81,927 86,496 27.5% 5.6%

    Subsidiaries & Investments 1,310 1,443 1,611 23.0% 11.7%

    Property & Equipment 1,135 1,188 1,224 7.8% 3.0%

    Other 1,518 2,030 2,430 60.1% 19.7%

    Total Assets 104,580 126,964 135,496 29.6% 6.7%

    Deposits 67,242 77,173 81,533 21.3% 5.7%

    Funds Borrowed 7,475 10,423 11,405 52.6% 9.4%

    Other 12,233 17,578 19,069 55.9% 8.5%

    Provisions 1,641 1,926 2,014 22.7% 4.6%

    Shareholders’ Equity 11,918 12,218 12,616 5.9% 3.3%

    Guarantees 17,217 21,807 23,341 35.6% 7.0%

    Commitments 50,322 63,084 71,602 42.3% 13.5%

    Derivatives 14,397 19,509 26,318 82.8% 34.9%

    Ass

    ets

    Li

    ab

    ilit

    ies

    & S

    HE

    Off

    -B.S

    Balance Sheet

  • 22

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    (TRY-Thousand, %) YE2012 3Q2013 4Q2013 YE2013 ∆{2012 2013}

    ∆{3Q13 4Q13)

    Net Interest Income 4,084,594 1,054,062 1,135,300 4,789,617 17.3% 7.7%

    Net Fee & Com. Income 447,700 146,466 158,922 686,511 53.3% 8.5%

    Dividend Income 57,078 0 40 54,001 (5.4%) 100.0%

    Net Trading Income 336,542 19,607 25,203 231,657 (31.2%) 28.6%

    Other Income 624,680 175,920 184,617 708,320 13.4% 4.9%

    Total Revenues 5,550,594 1,396,055 1,504,082 6,470,106 16.6% 7.7%

    Operating Expense (2,261,175) (719,698) (678,872) (2,629,953) 16.3% (5.7%)

    Provisions (1,404,058) (319,741) (353,894) (1,857,239) 32.3% 10.7%

    Tax Provisions (425,281) (100,150) (46,984) (397,375) (6.6%) (53.1%)

    Net Income 1,460,080 256,466 424,332 1,585,539 8.6% 65.5%

    Income Statement

  • 23

    INVESTOR RELATIONS Earnings Presentation_Bank Only YE13

    www.vakifbank.com.tr

    April, 2013 •Secured US$ 251.5 million and 555.2 million 1 year syndicated loan, all-in cost as Libor +1.00% and Euribor + 1.00%, respectively •103% roll-over ratio 38 banks from 19 countries participated. September, 2013 •Secured US$ 166 million and 471 million 1 year syndicated loan, all-in cost as Libor +0.75% and Euribor + 0.75%, respectively •107% roll-over ratio 27 banks from 17 countries participated.

    •Issued on November 2012 and terminated on November 2013 with a 346 days maturity, TL 53.4 million bond at a cost of 6.93%. •Issued on January 2013 and terminated on January 2014 with a 364 days maturity, TL 150 million bond at a cost of 7.50%. •Issued on May 2013 and terminated on November 2013 with a 175 days maturity, TL 684.4 million bond at a cost of 5.04%. •Issued on May 2013 and terminates on May 2014 with a 364 days maturity, TL 65.6 million bond at a cost of 5.11%. •Issued on July 2013 and terminated on December 2013 with a 168 days maturity, TL 696.0 million bond at a cost of 7.93%. •Issued on July 2013 and terminates on May 2014 with a 315 days maturity, TL 54 million bond at a cost of 8.24%. •Issued on September 2013 and terminates on February 2014 with a 175 days maturity, TL 671.8 million bond at a cost of 9.48%. •Issued on September 2013 and terminates on February 2014 with a 175 days maturity, TL 190 million bond at a cost of 9.48%. •Issued on September 2013 and terminates on August 2014 with a 350 days maturity, TL 38.2 million bond at a cost of 10.37%. •Issued on November 2013 and terminates on May 2014 with a 175 days maturity, TL 712.2 million bond at a cost of 8.17%. •Issued on December 2013 and terminates on June 2014 with a 168 days maturity, TL 671.3 million bond at a cost of 8.84%. •Issued on January 2014 and terminates on June 2014 with a 154 days maturity, TL 450 million bond at a cost of 9.32%.

    Diversified funding source via Non-Deposit Funding Syndicated Loan

    Eurobond & Private Placements Eurobond/April 2013 •US$ 600 million Eurobond with 5 year maturity •Priced with a fixed coupon of 3.75%, 193 investors participated, geographic allocation: EU 35%, USA 34%, UK 18%, Asia/ME 13% Eurobond/October, 2013 •US$ 500 million Eurobond with 5 year maturity •Priced with a fixed coupon of 5%, 242 investors participated, geographic allocation: EU 14%, USA 33%, UK 27%, Swiss 12%, Asia/ME 14% Private Placements •US$ 762 million equivalent private placements were issued since June 2013 under GMTN program

    Local Currency Bond

    IFI Borrowing World Bank :US$ 67 million SME Financing Energy Efficient loan was signed in May, 2013 up to 30 years. US$ 15 million was allocated in January, 2014. EBRD :US$ 80 million Tur-SEFF II was signed in May, 2013 and the amount of US$ 55 million was allocated in May, 2013. EIB :25 million EUR GAGF project loan was allocated. The extension amount for the facility 50 million EUR was signed in December, 2013.

    Municipal Loan, US$ 100 million, was signed in December, 2013 and in negotiation process. Tur-SEFF II extension; US$ 50 million was signed in July, 2013 and US$ 25 million was allocated in December, 2013.

    KfW :100 million EUR MSME loan was allocated in November, 2013.

  • Investor Relations Çamlık Cad. Çayır Çimen Sok. No:2 Kat:6 34330 1. Levent-İstanbul / Turkey E-mail: [email protected] Tel (90-212) 316 7390 Fax (90-212) 316 7126 www.vakifbank.com.tr

    Disclaimer Notice: This report has been prepared by Vakifbank, Investor Relations Department and is provided for information purposes only. Although the information on which the report is based has been obtained from sources which we believe to be reliable, no representation or warranty is made by Vakifbank for the accuracy or completeness of the information contained herein. Information contained herein is subject to change without notice. Vakifbank accepts no liability whatsoever for any direct or consequential loss of any kind arising out of the use this document or any part of its content.